Fashion in crisis: why brands should take responsibility for cancelled orders during Covid-19

In
the midst of the Covid-19 pandemic, fashion brands quickly cancelled orders in the
factories responsible for producing their clothes. Orders that had already been
made and materials paid for by the factories themselves. With the majority of
clothing for Western markets being produced in developing countries like
Cambodia, Vietnam and Bangladesh, Covid-19 is drawing greater attention to existing
inequalities within global fashion supply chains. Here, Kim van der Weerd,
a former general manager of a garment factory in Cambodia, sheds light on why
this is the case and what happens to the clothes that brands no longer want.

Major
garment producing countries like India, Jordan, Myanmar, Vietnam, Sri
Lanka and Cambodia have been forced to close their factories as a result of brands
cancelling their orders. In Bangladesh, more
than 1000 factories employing 1.2 million workers have been impacted, with
cancellations of orders worth $1.5 billion. In a country where 90%
of exports are textiles, the social and economic impact costs are high.

The inequality
within global fashion supply chains has meant those at the bottom stand to be
hit the hardest and stems from purchasing practices that have long favoured the
powerful.

Purchasing practices

From Kim’s experience, current buying practices mean that brands will pay months (often 60 days) after a clothing order has been delivered, rather than at the point of order. As a result, contracted suppliers will pay ahead of time for the fabric and raw materials they need. In Cambodia, the absence of fabric mills means fabric orders may be placed and paid for up to 6 months in advance, even before orders have come in. Added to this financial pressure, is knowing how much fabric to order – a system fraught with inaccuracies as suppliers rely on brands’ forecasts which often lack the precision you might expect. While over ordering on fabric means cash is tied up in stock, if factories order too little, the risks are even greater. Unhappy clients can drop their contracts altogether and choose another supplier at a moment’s notice.

In the wake of Covid-19, major fashion brands and retailers such as ASOS cancelled orders and stopped payments for orders that had already been placed and when the work had already been done, leaving already vulnerable factory workers to assume the risks. While some brands have committed to taking responsibility for the impact on workers within their supply chains by extending payment terms, others have demanded discounts or done nothing at all.

Cancelled orders mean factories will be forced to pay to destroy the clothes and raw materials they have already purchased at their own expense and lay off their workers. In an industry characterised by an unfair and unequal distribution of power, garment factories in developing countries stand to lose every time. In addition, the unforeseen and unpredictable nature of Covid-19 has allowed major brands to absolve themselves of any responsibility for protecting their suppliers and its workers. Factories must now count on the ethics and goodwill of their clients.

A time for change

As part of the fashion supply chain we have the power to demand what brands are doing to support the factories and workers that make our clothes. Placing greater pressure on brands to change their behaviour around purchasing practices can help to protect the poorest at the bottom of the supply chain and reduce environmental waste.

What else can we do? Kim suggests, when brands announce cancelled orders, demand to know whether they will reimburse the costs the factories have sunk. Demand to know whether they are supporting their factories with payroll financing in the absence of orders. When they tout their sustainability credentials, demand to see their policies on purchasing practices.